Third quarter 2014 results: CMA CGM reports record-high volumes and strong growth in net income

The Board of Directors of CMA CGM Group, the world’s third largest container shipping company, met under the chairmanship of Jacques R. Saadé, Chairman and Chief Executive Officer, to review the financial statements for the third quarter of 2014.

During the third quarter of 2014, as the market experienced the customary peak-season:

• Consolidated revenue amounted to USD 4.4 billion: a 6.4% increase compared with the 3rd quarter of 2013.
• Volumes carried increased by 8.3 % to 3.2 million of Twenty-foot Equivalent Units (“TEUs”).
• Average revenue TEU decreased by 1.8% over the period.

Carried volumes have reached their highest level over the Group’s history thanks to the lines deployed in high-growth areas and to the strength of the services offered on the main markets.

This growth stems in particular from:

• Asia-Europe where steady growth has been recorded.
• Intra-Asia and Oceania: in these areas, the Group operates through expert subsidiaries such as ANL or CNC, complementary to CMA CGM.
• Africa: CMA CGM has continued the development of its maritime and intermodal activities on this continent. The Group has expanded its service offering and has opened new land corridors, under the CMA CGM or the DELMAS brands.
• Reefer transport: CMA CGM has a strong expertise on this high-growth transport segment. The Group recently purchased 7,000 new reefer containers and targets to carry one million reefers in 2015.

CMA CGM has also continued its operational cost control policy. Operating costs per TEU have declined slightly (-0.4%). Bunker consumption per TEU has fallen by 3.4 % versus third quarter of 2013. This decrease mainly results from higher vessel filling factors and continued energy efficiency efforts.

In this respect, CMA CGM initiated an optimisation programme for its owned fleet in 2013, including the modification of bulbous bows. This change, implemented in dry dock, optimises the vessel design to the speeds operated under “slow-steaming”. Modifications have already been made to fifteen vessels and ten additional ones are planned. This innovation results in fuel and CO2 emission savings in excess of 5% per voyage.

In the second quarter of 2014, the core operating margin thus amounted to 5.7 %: one of the strongest in the industry.

The net income (Group share) amounted to USD 201 million in the 3rd quarter of 2014, compared with a net income of USD 70 million in the 3rd quarter of 2013.

This high operational performance reinforces the financial structure of the Group, which boasts high available cash, an adjusted net debt which has significantly decreased (-15.8%) and a gearing of 0.61.

Over the first nine months 2014, the Group’s turnover, amounts to USD 12.5 billion, a 4.3 % increase with respect to the same period in 2013. The carried volumes amount to TEUs 9.1 million: a 7.4 % increase. The core operating margin is stable: USD 638 million over the first 9 months of 2014.
Developments and Outlook:

During the third quarter:

The “CMA CGM Elbe” was delivered in October. Along with the “CMA CGM Danube”, which joined the fleet during the second quarter, this vessel belongs to a series of twenty-eight 9,400 TEU vessels. Those vessels are designed, in particular, to adapt the Group’s fleet to the widening of the Panama canal, and will feature an unequalled number of reefer plugs for vessels of this size. Four other vessels of this size are expected to be delivered by the end of this year. The Group will also take delivery of six vessels with a capacity of TEU 18,000 in 2015.
In July 2014, CMA CGM signed an agreement with Adani Ports, related to a 4th container terminal in Mundra.
The Group has strengthened its financing by renegotiating the securitisation of its receivables, which is now combined within a single programme which amount is increased to USD 880 million. This financing will contribute to increase the Group available cash and to decrease the group’s financing cost as from mid-October.

During the fourth quarter, the operating environment is likely to be characterised by the usual seasonal volumes slowdown, freight rates volatility and lower bunker price. CMA CGM volume growth should nevertheless exceed that of the market as a whole.

Finally, the strategic operational agreement between CMA CGM, CSCL and UASC, announced in early September, will be launched in early 2015. This agreement called Ocean Three, will provide a fast and reliable service offering for East-West lines. Under this agreement, 162 vessels will be pooled on the following routes: Asia-Europe, Asia-Mediterranean, Transpacific and Asia-US East Coast. Therefore, the number of weekly calls offered and the transit times will be amongst the best on the market, in order to better meet customers’ expectations. This agreement has been validated by the Federal Maritime Commission and is not subject to any other approval from regulatory and competition authorities.